How to Make OPC (One Person Company) in India

A One Person Company (OPC) provides several advantages that make it a preferred choice for solo entrepreneurs. It ensures business continuity, offers financial protection, and enhances credibility. Here are some key benefits of an OPC:

• Limits liability – The owner’s personal assets remain protected from business debts and losses.

• Enhances legal recognition – The company gains a corporate identity, making it more trustworthy.

• Offers tax benefits – OPCs enjoy lower tax rates and exemptions under certain provisions.

• Simplifies decision-making – A single owner makes all decisions, ensuring quick implementation.

• Ensures business continuity – The nominee takes over in case of the owner’s death or incapacity.

• Improves access to funding – Banks and financial institutions prefer lending to OPCs over sole proprietorships.

Required Documents for One Person Company

Registering a One Person Company (OPC) requires specific documents to verify the identity of the owner and the registered office. Proper documentation ensures a smooth registration process. To register an OPC, you need the following documents:

For the Director/Owner:

• PAN card

• Aadhaar card

• Passport (if applicable)

• Voter ID or driving license

• Latest bank statement or utility bill as address proof

For the Registered Office:

• Rental agreement or property ownership document

• NOC from the property owner

• Electricity or water bill (not older than two months)

How to Make OPC: Registration Process

An OPC in India involves a structured process that ensures legal recognition and compliance with government regulations. The Ministry of Corporate Affairs (MCA) governs this process, and applicants must complete several steps before incorporation. Here’s how to register an OPC:

1. Obtain a Digital Signature Certificate (DSC)

The director must obtain a DSC from a government-approved certifying authority. This digital signature is required to file online documents for company registration.

2. Apply for Director Identification Number (DIN)

The DIN is a unique identification number assigned to the director. The applicant can apply for a DIN while filling out the SPICe+ form on the MCA portal.

3. Reserve the Company Name

Choosing a unique name is essential for OPC registration. The applicant must submit name proposals through the RUN (Reserve Unique Name) service on the MCA website. The selected name must follow MCA guidelines and should not be identical to existing companies or trademarks.

4. Draft the Memorandum and Articles of Association

• Memorandum of Association (MoA) – Defines the company’s objectives and purpose.

• Articles of Association (AoA) – Outlines the rules and regulations governing the company’s operations.

The owner must also nominate a person who will take over the business in case of the owner’s death or incapacity. The nominee’s consent must be submitted in Form INC-3.

5. File the Incorporation Application

The applicant must complete the SPICe+ form (INC-32) on the MCA portal and submit it along with the required documents, including identity proof, address proof, and the company’s registered office details.

6. Obtain the Certificate of Incorporation

Once the application is verified, the MCA issues the Certificate of Incorporation, confirming the company’s legal status. The applicant also receives the company’s Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).

7. Open a Business Bank Account

After receiving the incorporation certificate, the owner must open a current bank account in the company’s name to manage financial transactions legally.

By following these steps, an entrepreneur can successfully register an OPC in India and enjoy the benefits of a legally recognized business entity.

OPC Compliance Requirements After Registration

After registering a One Person Company (OPC), the owner must fulfill certain legal and financial obligations to ensure smooth operations and avoid penalties. Here are the key compliance requirements:

• File annual returns: The company must submit Form MGT-7A to the Ministry of Corporate Affairs (MCA) every year.

• Maintain financial statements: OPCs must prepare and file their financial statements using Form AOC-4 within 180 days from the end of the financial year.

• Conduct statutory audit: Even if an OPC has minimal transactions, it must appoint a certified Chartered Accountant (CA) to audit its financial statements.

• Pay income tax and GST: The company must file income tax returns (ITR-6) annually and comply with GST regulations if its turnover exceeds ₹20 lakhs (for service-based businesses) or ₹40 lakhs (for goods-based businesses).

• Hold board meetings: If the company has more than one director, it must conduct at least one board meeting every six months.

• Update statutory registers: The company must maintain records such as the register of members, financial statements, and board resolutions.

• Comply with conversion rules: If the company’s turnover exceeds ₹2 crores or paid-up capital crosses ₹50 lakhs, it must convert into a private limited company.

Following these compliance requirements ensures that the OPC remains legally valid and avoids fines or legal issues.

Cost of Registering and Maintaining an OPC in India

Setting up and maintaining a One Person Company (OPC) involves various costs, including government fees, professional charges, and annual compliance expenses. Here’s a breakdown of the key costs:

Registration Costs

• Digital Signature Certificate (DSC): Costs between ₹800 – ₹2,000 per person.

• Director Identification Number (DIN): Usually included in the SPICe+ form but may cost around ₹500 if applied separately.

• Name reservation fee: Costs ₹1,000 for submitting the RUN (Reserve Unique Name) application.

• Incorporation fee: Varies based on state and authorized capital, usually ranging from ₹3,000 – ₹7,000.

• Stamp duty: Depends on the state of registration and the company’s authorized capital, typically ₹1,000 – ₹5,000.

• Professional fees: If hiring a consultant or CA, charges range from ₹5,000 – ₹15,000.

Annual Maintenance Costs

• Compliance and filing fees: Annual return filing (MGT-7A) and financial statement filing (AOC-4) cost ₹500 – ₹2,000 each.

• Statutory audit fee: Hiring a Chartered Accountant (CA) for mandatory auditing costs ₹5,000 – ₹30,000, depending on business size.

• Income tax and GST compliance: Professional fees for tax filing range from ₹2,000 – ₹10,000 annually.

• Renewal of digital signature: Costs ₹800 – ₹2,000 every two years.

The total cost of registering an OPC generally falls between ₹10,000 – ₹30,000, while annual maintenance costs range from ₹8,000 – ₹50,000, depending on compliance needs and professional services hired. Proper planning helps entrepreneurs manage these expenses efficiently.

Disadvantages of One Person Company (OPC)

While a One Person Company (OPC) offers many benefits, it also has some limitations that entrepreneurs should consider before registering. Here are the key disadvantages of an OPC:

• Restricts ownership: Only one person can own and manage the company, limiting expansion opportunities.

• Limits fundraising options: OPCs cannot raise equity funding by issuing shares, making it harder to attract investors.

• Requires mandatory conversion: If the company’s turnover exceeds ₹2 crores or its paid-up capital crosses ₹50 lakhs, it must convert into a private limited company.

• Increases compliance burden: Even though OPCs have fewer regulations than private limited companies, they still need to file annual returns, maintain financial records, and comply with tax laws.

• Prevents involvement in certain businesses: OPCs cannot engage in non-banking financial activities or carry out investment-related business operations.

• Imposes higher tax rates: Unlike sole proprietorships, OPCs do not enjoy individual tax slabs and must pay a flat corporate tax of 25%–30%, increasing the tax burden.

Despite these challenges, OPCs remain a great choice for solo entrepreneurs who want legal protection and structured business operations.

How to Make OPC: Conclusion

A One Person Company is a great option for solo entrepreneurs who want to enjoy the benefits of a private limited company while maintaining full control over their business. With limited liability, tax benefits, and legal recognition, OPCs are becoming increasingly popular in India. If you meet the eligibility criteria, registering an OPC can be a smart move for your business growth.

If you’re looking for professional assistance, EasetoCompliance provides OPC registration services along with other business setup services. Their expert team ensures a smooth and hassle-free registration process, helping you focus on growing your business. Contact us to start your business today!

FAQs on How to Make OPC in India

Q1. How long does it take to register an OPC in India?

The registration process typically takes 7 to 15 days, depending on document verification and government approvals.

Q2. What is the difference between OPC and Sole Proprietorship?

OPC is a separate legal entity with limited liability, while a sole proprietorship has no separate identity, and the owner is personally liable for all debts. OPC requires moderate compliance, whereas sole proprietorship has minimal compliance.

Q3. Can an NRI or foreign national register an OPC in India?

No, only an Indian citizen and resident can register an OPC. However, an NRI or foreign national can invest in an OPC or register a Private Limited Company instead.